The board in 2008 approved a $3.30 a gallon tax, up from 20 cents a gallon on flavored malt beverages at the urging of the California Friday Night Live Partnership, Students Making a Community Change and the California Youth Council. In 2011, the board approved a similar tax hike for flavored wines and wine coolers.

Diageo-Guinness USA Inc. in Connecticut and the Flavored Malt Beverage Coalition sued to block the change for malt beverages, saying the Department of Alcoholic Beverage Control has exclusive power over sale and taxation of alcohol, not the Board of Equalization.

A trial court previously sided with the board, but in May the appeals court ruled that the board's attempt to change the definition of "distilled spirits" did not withstand even the “relaxed scrutiny” that a court gives to quasi-legislative actions such as regulations.